Flexport generates predictive data about demand, global trade trends, transit time, availability of containers, costs, inventory management, duties and blockers, environmental impact, and bundling.\u00a0It starts with companies recording data related to supply and demand, transit time, etc., and Flexport helps companies find patterns and optimize cost and time savings.\u00a0It does this with its proprietary \u201cOperating Systems for Global Trade\u201d – the system that facilitates the collection, recording and pattern matching of the data\u00a0<\/p>\n\n\n\n
Companies use the Flexport digital platform to drive decision making by streamlining global trade logistics. The premise is a response to the simulation we did in TOM last year that highlighted the excruciating effects of the Bullwhip Effect and the importance of transparency in supply chain logistics. If all parties have visibility on all stages of the chain, there is a lower likelihood of severe Bullwhip Effect.\u00a0<\/p>\n\n\n\n
A company must invest in Flexport\u2019s platform to gain this kind of data which creates value by saving the company time and costs related to inefficiency. As more players in the supply chain make this investment, more value is created in the increased transparency at various steps in the chain.\u00a0<\/p>\n\n\n\n
So how does Flexport make money? Simply put, Flexport charges companies that opt into this value creation proposal a fee – a fee for transporting goods, for connecting companies with the more efficient logistics partners, customs filing, trade financing and other services. The company only became profitable in 2020, four years after its founding.\u00a0<\/p>\n\n\n\n
Specifically here are the revenue streams the company relies on: shipment and storage of goods (sharing revenue with logistics partners), customs brokerage fees, insurance packages, interest from trade financing via trade credit, cash advances, receivables discounting, loans, and asset-back finance, and investments.\u00a0Aside from this, Flexport is a privately held company so largely operates with raised capital. It is currently valued at $8.1 billion after having raised $935 million in Series E funding in February 2022.<\/p>\n\n\n\n
Despite the high prospect for success, there are still challenges with Flexport\u2019s business. The biggest challenges Flexport faces in creating and capturing value in its clients\u2019 data are related to disclosure and privacy. Given the clear value the data has to offer, companies seem to be more and more comfortable with sharing data, but as companies like Facebook and others demonstrate what it looks like for there to be bad stewards of data, the company seems to be leaning more into narratrice around protecting privacy. Due to the fact that supply chain management is currently under a microscope, the value created with the data currently seems to be more sought after than the safeguards of data privacy so for now, these challenges aren\u2019t blockers to the company\u2019s success. This could change.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"
Data that whips the Bullwhip Effect<\/p>\n","protected":false},"author":19374,"featured_media":16107,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-16106","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/competing-with-data-3\/","yoast_head":"\n